U.S. government securities briefly pared gains after sales of previously owned U.S. homes rose. Treasuries advanced as the European Central Bank said it will cut Cypriot banks off from emergency funds after March 25 unless the nation agrees on a bailout with international creditors. Federal Reserve policy makers said yesterday they will keep buying bonds at a pace of $85 billion a month to spur growth and reduce unemployment.

“The market is reacting to headlines as they come out,” Dan Mulholland, head of U.S. Treasury trading in the capital- markets unit of BNY Mellon Corp. in New York, said of the Cyprus crisis. “There are conflicting messages all the time. There’s the fear of some sort of contagion to peripheral Europe. We’re not seeing rising yields.”

The benchmark 10-year yield dropped three basis points, or 0.03 percentage point, to 1.93% at 10:27 a.m. in New York after climbing six basis points yesterday, the biggest increase since March 7. The 2% note maturing in February 2023 rose 9/32, or $2.81 per $1,000 face amount, to 100 21/32.

The yields have traded this month within a 22 basis-point range at closing, from 1.84% on March 1 to 2.06% on March 11.

Treasuries lost 0.6% this year through yesterday, poised for the biggest quarterly drop since the three months ended March 2012, a Bank of America Merrill Lynch Index showed.

Cheap Level

U.S. government securities due in a decade or more have been trading at almost the cheapest level since 2011 relative to global peers with comparable maturities, according to Bank of America Merrill Lynch indexes. Yields on the Treasuries reached 54 basis points higher than those in an index of other sovereign debt on March 14, near the most since August 2011, the data showed. The spread was 53 basis points yesterday.

Cyprus is seeking to overcome a deadlock after lawmakers rejected a 5.8 billion-euro ($7.5 billion) levy on bank deposits imposed by the European Union as a condition for a 10 billion- euro rescue. Cypriot officials are asking Russia, which granted the nation a 2.5 billion-euro loan in December 2011, to delay repayment until 2021 and grant a new facility of 5 billion euros, Vedomosti newspaper reported, without citing anyone.

The ECB’s Governing Council decided to maintain its current level of Emergency Liquidity Assistance for Cyprus until March 25, the central bank said in an e-mailed statement. After that, ELA may only be considered if the EU and International Monetary Fund program is in place that would ensure the solvency of the concerned banks, it said.